Same as always, it depends on what you are doing. As soon as you have a non-trivial display, data-processing needs, anything involving video or expectations of expanding features later, going to an MCU is a serious compromise and/or additional expense during development at best.
Does it make sense to put a Linux system in a light bulb? very likely not. Does it make sense making your product harder to use and dependent on a Linux server somewhere else just so you can avoid using a system powerful enough to do on-board data processing and get away with an MCU? Also probably not. I see plenty companies learning how to do embedded Linux because their purely microcontroller-based designs don't cut it anymore for what they want to do today.
I’m not a big fan of IoT, although Linux based advantages are a good repository of software, familiarity if your a Linux/Unix user, and easy deployment/prototyping.
The Pi Zero and Pi Zero W were used in a ton of IoT devices.
What were the zero and pi zero w used in?